S u m m e r 2 0 0 0 | V o l . 4 2 , N o .

4 | R E P R I N T S E R I E S

California
Management Review

Moral Person and Moral Manager:

How Executives Develop a
Reputation for Ethical Leadership
Linda Klebe Treviño
Laura Pincus Hartman
Michael Brown

© 2000 by The Regents of

the University of California
 Moral Person
and Moral Manager:
HOW EXECUTIVES DEVELOP
A REPUTATION FOR
ETHICAL LEADERSHIP
Linda Klebe Treviño
Laura Pincus Hartman
Michael Brown

lato asked, which extreme would you rather be: “an unethical person

P with a good reputation or an ethical person with a reputation for injus-

tice?” Plato might have added, “or would you rather be perceived as
ethically neutral—someone who has no ethical reputation at all?” Plato
knew that reputation was important. We now understand that reputation and
others’ perceptions of you are key to executive ethical leadership. Those others
include employees at all levels as well as key external stakeholders.
A reputation for ethical leadership rests upon two essential pillars: per-
ceptions of you as both a moral person and a moral manager. The executive as a
moral person is characterized in terms of individual traits such as honesty and
integrity. As moral manager, the CEO is thought of as the Chief Ethics Officer of
the organization, creating a strong ethics message that gets employees’ attention
and influences their thoughts and behaviors. Both are necessary. To be perceived
as an ethical leader, it is not enough to just be an ethical person. An executive
ethical leader must also find ways to focus the organization’s attention on ethics
and values and to infuse the organization with principles that will guide the
actions of all employees. An executive’s reputation for ethical leadership may
be more important now than ever in this new organizational era where more
employees are working independently, off site, and without direct supervision.
In these organizations, values are the glue that can hold things together, and
values must be conveyed from the top of the organization. Also, a single
employee who operates outside of the organizational value system can cost

This article is based upon the findings of a study initiated by and supported by the Ethics Resource
Center Fellows Program.

128 CALIFORNIA MANAGEMENT REVIEW VOL. 42, NO. 4 SUMMER 2000

 Moral Person and Moral Manager: How Executives Develop a Reputation for Ethical Leadership

the organization dearly in legal fees and can have a tremendous, sometimes
irreversible impact on the organization’s image and culture.

Moral Person + Moral Manager

= A Reputation for Ethical Leadership
These ideas about a dual pillar approach to ethical leadership are not
brand new. As the opening quotation suggests, the emphasis on reputation goes
back to Plato. Chester Barnard addressed the ethical dimension of executive
leadership sixty years ago. Barnard spoke about executive responsibility in terms
of conforming to a “complex code of morals”1 (moral person) as well as creating
moral codes for others (moral manager).
If Plato and Barnard had this right, why bother revisiting the subject of
ethical leadership now? We revisit the subject because, in our 40 structured
interviews (20 with senior executives and 20 with corporate ethics officers), we
found that many senior executives failed to recognize the importance of others’
perceptions and of developing a reputation for ethical leadership. To them, being
an ethical person and making good ethical decisions was enough. They spoke
proudly about having principles, following the golden rule, taking into account
the needs of society, and being fair and caring in their decisions. They assumed
that if they were solid ethical beings, followers would automatically know that.
They rejected the idea that successful ethical executives are often perceived as
ethically neutral. Furthermore, they assumed that good leaders are by definition
ethical leaders. One senior executive noted, “I don’t think you can distinguish
between ethical leadership and leadership. It’s just a facet of leadership. The
great leaders are ethical, and the lousy ones are not.”
However, a reputation for ethical leadership can not be taken for granted
because most employees in large organizations do not interact with senior exec-
utives. They know them only from a distance. Any information they receive
about executives gets filtered through multiple layers in the organization, with
employees learning only about bare-bones decisions and outcomes, not the per-
sonal characteristics of the people behind them. In today’s highly competitive
business environment, messages about how financial goals are achieved
frequently get lost in the intense focus on the bottom line. We found that just
because executives know themselves as good people—honest, caring, and fair—
they should not assume that others see them in the same way. It is so easy to
forget that employees do not know you the way you know yourself. If employ-
ees do not think of an executive as a clearly ethical or unethical leader, they are
likely to think of the leader as being somewhere in between—amoral or ethi-
cally neutral.
Interestingly, perceptions of ethically neutral leadership do not necessarily
arise because the leader is ethically neutral. In fact, many of the senior execu-
tives we spoke with convinced us that it was impossible for them to be ethically

CALIFORNIA MANAGEMENT REVIEW VOL. 42, NO. 4 SUMMER 2000 129

 Moral Person and Moral Manager: How Executives Develop a Reputation for Ethical Leadership

neutral in their jobs, given the many value-laden decisions they make every day.
Rather, the perception of ethically neutral leadership may exist because the
leader has not faced major public ethical challenges that would provide the
opportunity to convey his or her values to others. As one executive noted, “They
haven’t had to make any decisions on the margin . . . once you’re faced with [a
major public ethical dilemma], you bare your soul and you’re one or the other
[ethical or unethical].” On the other hand, a reputation for ethically neutral
leadership may exist because the leader has not proactively made ethics and
values an explicit and evident part of the leadership agenda. Executives must
recognize that if they do not develop a reputation for ethical leadership, they
will likely be tagged as “ethically neutral.” As a result, employees will believe
that the bottom line is the only value that should guide their decisions and that
the CEO cares more about himself and the short-term financials than about the
long-term interests of the organization and its multiple stakeholders.
Figure 1 provides a summary of our study’s findings.

Pillar One: Moral Person

Being an ethical person is the substantive basis of ethical leadership.
However, in order to develop a reputation for ethical leadership, the leader’s
challenge is conveying that substance to others. Being viewed as an ethical per-
son means that people think of you as having certain traits, engaging in certain
kinds of behaviors, and making decisions based upon ethical principles. Further-
more, this substantive ethical core must be authentic. As one executive put it, “If
the person truly doesn’t believe the ethical story and preaches it but doesn’t feel
it . . . that’s going to show through. . . . But, [a true ethical leader] walks in
[and] it doesn’t take very long if you haven’t met him before [you think] there’s
a [person] with integrity and candor and honesty.”

Traits
Traits are stable personal characteristics, meaning that individuals behave
in fairly predictable ways across time and situations and observers come to
describe the individual in those terms. The traits that executives most often asso-
ciate with ethical leadership are honesty, trustworthiness, and integrity. A very
broad personal characteristic, integrity was the trait cited most frequently by the
executives. Integrity is a holistic attribute that encompasses the other traits of
honesty and trustworthiness. One executive said that the average employee
would say that the ethical leader is “squeaky clean.” They would think “I know
that if I bring an issue to him or her that I can count on their honesty and
integrity on this because I’ve seen their standards and that one, integrity, is
one that’s very important to them.”
Trustworthiness is also important to executives. Trust has to do with consis-
tency, credibility, and predictability in relationships. “You can’t build a long-term
relationship with a customer if they don’t trust you.” Finally, honesty, sincerity,

130 CALIFORNIA MANAGEMENT REVIEW VOL. 42, NO. 4 SUMMER 2000

 Moral Person and Moral Manager: How Executives Develop a Reputation for Ethical Leadership

FIGURE 1. The Two Pillars of Ethical Leadership

Moral Person Moral Manager

Traits Role Modeling

• Integrity Through
• Honesty Visible Action
• Trustworthiness

Behaviors Rewards and

• Do the Right Thing Discipline
• Concern for People
• Being Open
• Personal Morality

Decision-Making Communicating
• Hold to Values About Ethics
• Objective/Fair and Values
• Concern for Society
• Follow Ethical
Decision Rules

and forthrightness are also important. “An ethical leader . . . tends to be rather
candid, certain, [and is] very careful to be factual and accurate. . . . An ethical
leader does not sugarcoat things . . . he tells it like it is.”

Behaviors
“Your actions speak so loudly, I can’t hear what you’re saying.” That is the
sentiment expressed by one executive. Although traits are clearly important to
ethical leadership, behaviors are perhaps more so, and these include: “The way
you act even when people aren’t looking.” “People are going to judge you not
by what you say but by what you do.” “People look at you and understand over
time who you are personally as a result of their observations.” Important behav-
iors include “doing the right thing,” showing concern for people and treating

CALIFORNIA MANAGEMENT REVIEW VOL. 42, NO. 4 SUMMER 2000 131

 Moral Person and Moral Manager: How Executives Develop a Reputation for Ethical Leadership

people right, being open and communicative, and demonstrating morality in

one’s personal life.
First and foremost, executives said that ethical leaders do the right thing.
One retired CEO talked about the founder of his firm, a man who “was known
for his strong belief that there is only one way to do business and that’s the right
way.”
Second, executive ethical leaders show concern for people through their
actions. They treat people well—with dignity and respect. “I think [the ethical
leader] treats everybody with dignity—meaning everybody—whether they’re
at the lowest level or higher levels . . . everyone gets treated with dignity and
respect. I’ve also found that if you treat people with dignity and respect and
trust, they almost invariably will respond in that fashion. It’s like raising chil-
dren. If you really don’t trust them, they don’t have much to lose by trying to
get away with something. If they feel you trust them, they are going to think
long and hard before they do something that will violate that trust.” Several of
the executives used the military example. “In the military, the troops eat before
the officers. . . . Leaders take care of their troops. . . . A leader is selfless, a leader
shares credit, a leader sees that contributors are rewarded.”
Being open means that the executive is approachable and a good listener.
Employees feel comfortable sharing bad news with the ethical leader. One exec-
utive said, “An ethical leader would need to be approachable so that . . . people
would feel comfortable raising the tough issues . . . and know that they would
be listened to.” Another put it this way: “In general, the better leaders that I’ve
met and know are more than willing to share their experiences of rights and
wrongs, successes and failures.” These leaders do not kill the messenger who
brings bad news. They encourage openness and treat bad news as a problem
to be addressed rather than punished.
Finally, personal morality is associated with ethical leadership. We asked
explicitly about personal morality because our interviews with executives took
place during the Monica Lewinsky scandal in the Clinton Presidency and the
topic was prominent in everyone’s mind. When we asked whether personal
morality was linked to ethical leadership, most executives answered yes. “You
can not be an ethical leader if your personal morality is in question. . . . To be
a leader . . . what you do privately reflects on that organization. Secondly, to be
a leader you have a greater standard, a greater responsibility than the average
person would have to live up to.”

Decision Making
In their decision-making role, executive ethical leaders are thought to
hold to a solid set of ethical values and principles. They aim to be objective and fair.
They also have a perspective that goes beyond the bottom line to include concerns
about the broader society and community. In addition, executives said that ethical
leaders rely upon a number of ethical decision rules such as the golden rule and

132 CALIFORNIA MANAGEMENT REVIEW VOL. 42, NO. 4 SUMMER 2000

 Moral Person and Moral Manager: How Executives Develop a Reputation for Ethical Leadership

the “New York Times Test.” The “New York Times Test” says that, when making a
decision, ethical leaders should ask themselves whether they would like to see
the action they are contemplating on tomorrow morning’s front page. This ques-
tion reflects the ethical leader’s sensitivity to community standards.
To summarize, the “moral person” pillar of ethical leadership represents
the substance of ethical leadership and it is an important prerequisite to develop-
ing a reputation for ethical leadership because leaders become associated with
their traits, behaviors, and decisions as long as others know about them. With
the moral person pillar in place, you should have a reputation for being an ethi-
cal person. You can think of this as the ethical part of the term “ethical leader-
ship.” Having a reputation for being a moral person tells employees what you are
likely to do—a good start, but it does not necessarily tell them what they should
do. That requires moral managing—taking the ethics message to the rest of the
organization.
Many of the executives we interviewed thought that being an ethical
person who does the right thing, treats people well, and makes good decisions
was necessary and sufficient for being an ethical leader. This is not surprising
because executives know other executives personally. They have served under
them, worked with them, and observed their behavior at close hand. Therefore,
in their minds, an executive’s ethical traits, behaviors, and decisions are auto-
matically associated with a reputation for ethical leadership. However, some of
the executives and even more of the ethics officers noted that being an ethical
person was not enough. To develop a reputation for ethical leadership with
employees, leaders must make ethics and values a salient aspect of their leader-
ship agenda so that the message reaches more distant employees. To do this,
they must be moral managers as well as moral persons. As one executive
expressed it: “Simply put, ethical leadership means doing the right thing, and
it means communicating so that everyone understands that [the right thing] is
going to happen at all times . . . I think that most of the people I’ve been in busi-
ness with adhere to the first but do less well with the second. And, in my experi-
ence, it is something that has to be reinforced constantly . . . the second part is
the hardest.”

Pillar Two: Moral Manager

In order to develop a reputation for ethical leadership, a heavy focus on
the leadership part of that term is required. The executive’s challenge is to make
ethics and values stand out from a business landscape that is laden with mes-
sages about beating the competition and achieving quarterly goals and profits.
Moral managers recognize the importance of proactively putting ethics at the
forefront of their leadership agenda. Like parents who should explicitly share
their values with their children, executives need to make the ethical dimension
of their leadership explicit and salient to their employees. Executives who fail
to do this risk being perceived as ethically neutral because other more pervasive
messages about financial success take over. One CEO put it this way: “We do

CALIFORNIA MANAGEMENT REVIEW VOL. 42, NO. 4 SUMMER 2000 133

 Moral Person and Moral Manager: How Executives Develop a Reputation for Ethical Leadership

some good things [turn down unethical business opportunities, develop people,
champion diversity], but compare the number of times that we recognize those
[ethical] achievements versus how much we recognize financial achievements—
it’s not close. I mean, I cringe . . . saying that . . . I’m not saying we don’t work
at these other things, but . . . the recognition is still very much on financial per-
formance and . . . it’s true in almost all organizations . . . And that’s what’s
wrong. That’s what’s out of kilter.”
Our study identified a number of ways moral managers can increase the
salience of an ethics and values agenda and develop a reputation for ethical
leadership. They serve as a role model for ethical conduct in a way that is visible
to employees. They communicate regularly and persuasively with employees
about ethical standards, principles, and values. Finally, they use the reward sys-
tem consistently to hold all employees accountable to ethical standards.

Role Modeling through Visible Action

Role modeling may seem similar to the “doing the right thing” category
above. However, role modeling emphasizes visible action and the perceptual and
reputational aspects of ethical leadership. Some ethical behaviors will go com-
pletely unnoticed while others will be noticed and will contribute to a reputation
for ethical leadership. Effective moral managers recognize that they live in a
fishbowl of sorts and employees are watching them for cues about what’s impor-
tant. “You are demonstrating by your example on and off the job, in other
words, 24 hours a day, seven days a week, you’re a model for what you believe
in and the values.” In addition, “if you’re unethical . . . people pick up on that
and assume because you’re the leader that it’s the correct thing to do . . . that
not only are you condoning it, but you’re actually setting the example for it.”
The effective moral manager understands which words and actions are
noticed and how they will be interpreted by others. In some cases, visible exec-
utive action (without any words at all) is enough to send a powerful message.
One executive offered the following as an example of the power of executive
action. “Some years ago, I was running one of our plants. I had just taken over
and they were having some financial troubles. . . . Most of our management was
flying first class. . . . I did not want . . . my first act to be to tell everybody that
they are not gonna fly first class anymore, so I just quit flying first class. And it
wasn’t long before people noticed it and pretty soon everybody was flying
coach. . . . I never put out a directive, never said a word to anybody . . . and
people noticed it. They got the message. . . . People look to the leader. If the
leader cuts corners, they say its okay to cut corners around here. If the leader
doesn’t cut corners, we must be expected not to do any of that around here.”
Negative signals can also be sent by visible executive action and moral
managers must be particularly sensitive to these. For example, what kind of
signal does it send when your organization’s ethics policy prohibits employees
from accepting any kind of gift from a prospective client and then employees
see a group of senior executives sitting in a client’s box enjoying a professional

134 CALIFORNIA MANAGEMENT REVIEW VOL. 42, NO. 4 SUMMER 2000

 Moral Person and Moral Manager: How Executives Develop a Reputation for Ethical Leadership

football or basketball game? Unless the CEO is wearing a large sign that says “we
paid for these tickets,” the message is clear. Ethics policies do not apply equally
to everyone. It becomes much easier for an employee to rationalize receiving
gifts. According to one interviewee, many executives “wouldn’t think twice
about it because you don’t intend to do anything wrong.” However, employees
are generally not aware of your intent. They see the actions and make inferences
based upon them.

Communicating about Ethics and Values

Many executives are uncomfortable talking about ethics and wonder
about those who do. In our interviews, some executives expressed concern
about the leader who talks about ethics too much. “I distrust people who talk
about it all the time. I think the way you do it [ethical leadership] is to demon-
strate it in action . . . the more a person sermonizes about it, the more worried
I am . . . sometimes you have to talk about it, but mostly you don’t talk about
it, you just do things.” However, moral managers need to talk about ethics and
values, not in a sermonizing way, but in a way that explains the values that
guide important decisions and actions. If people do not hear about ethics and
values from the top, it is not clear to employees that ethics and values are im-
portant. You may not feel comfortable talking about ethics if it means discussing
the intricacies of Aristotle or Kant. However, talking about ethics with your
employees does not mean that at all. It means talking about the values that are
important to you and the organization. It is a bit like teaching children about
sex. Parents can choose to avoid the uncomfortable subject, hoping that their
children will learn what they need to know in school; or, they can bring an
expert home who knows more than they do about the physiology of the human
reproductive system. However, what parents really want their children to know
about and adopt is a set of values the family believes in such as love, respect,
and responsibility. To be most effective, that message must come from parents,
in words and in actions. Similarly, the message about the values guiding deci-
sions and actions in business should come from senior leaders.

The Reward System

Using rewards and discipline effectively may be the most powerful way
to send signals about desirable and undesirable conduct. That means rewarding
those who accomplish their goals by behaving in ways that are consistent with
stated values. “The most senior executive should reward the junior executive,
the manager, the line people who make these [ethical] decisions . . . reinforce-
ment is very important.”
It also means clearly disciplining employees at all levels when they break
the rules. A financial industry executive provided the following two examples.
“If there’s a situation within the corporation of sexual harassment where [the
facts are] proven and management is very quick to deal with the wrongdoer . . .
that’s leadership. To let the rumor mill take over, to allow someone to quietly

CALIFORNIA MANAGEMENT REVIEW VOL. 42, NO. 4 SUMMER 2000 135

 Moral Person and Moral Manager: How Executives Develop a Reputation for Ethical Leadership

go away, to resign, is not ethical leadership. It is more difficult, but you send the
message out to the organization by very visible, fair, balanced behavior. That’s
what you have to do.”
“If someone has taken money, and they happen to be a 25-year employee
who has taken two hundred dollars over the weekend and put it back on Mon-
day, you have to . . . fire that person. [You have to make] sure everybody under-
stands that Joe took two hundred dollars on Friday and got [fired] . . . [they
must also] be assured that I did have a fact base, and that I did act responsibly
and I do care about 25-year people.”
Another financial industry executive talked about how he was socialized
early in his career. “When I was signed . . . to train under a tough, but fair part-
ner of the firm . . . he [said]there are things expected from you . . . but if you
ever make a transaction in a client’s account that you can’t justify to me was
in the best interest of the customer, you’re out. Well that kind of gets your
attention.”
An airline executive said, “we talk about honesty and integrity as a core
value; we communicate that. But then we back it up . . . someone can make a
mistake. They can run into the side of an airplane with a baggage cart and put a
big dent in it . . . and we put our arm around them and retrain them. . . . If that
same person were to lie to us, they don’t get a second chance . . . When it comes
to honesty, there is no second chance.”
The moral manager consistently rewards ethical conduct and disciplines
unethical conduct at all levels in the organization, and these actions serve to
uphold the standards and rules. The above reward system examples represent
clear signals that will be noticed and that demonstrate clearly how employees
are held accountable and how the leader backs up words with actions.
In summary, to develop a reputation for ethical leadership, one must be
strong on both dimensions: moral person and moral manager. The ethical leader
has a reputation for being both a substantively ethical person and a leader who
makes ethics and values a prominent part of the leadership agenda.

What Does Ethical Leadership Accomplish?

The executives we talked with said that ethical leadership was good for
business, particularly in the long term, and avoids legal problems. “It probably
determines the amount of money you’re spending in lawsuits and with corpo-
rate attorneys . . . you save a lot of money in regulatory fees and lawyer fees and
settlement fees.” They also said that ethical leadership contributes to employee
commitment, satisfaction, comfort, and even fun. “People enjoy working for an
ethical organization” and it helps the organization attract and retain the best
employees. “If the leadership of the company reflects [ethical] values . . . people
will want to work for that company and will want to do well.” Finally, employ-
ees in an organization led by an executive ethical leader will imitate the behav-
ior of their leader and therefore the employees will be more ethical themselves.

136 CALIFORNIA MANAGEMENT REVIEW VOL. 42, NO. 4 SUMMER 2000

 Moral Person and Moral Manager: How Executives Develop a Reputation for Ethical Leadership

FIGURE 2. Executive Reputation and Ethical Leadership

Strong Hypocritical Leader Ethical Leader

Moral Manager
Unethical Leader
Weak
? Ethically Neutral Leader ?

Weak Strong

Moral Person

Next, we combine the two pillars of ethical leadership into a two by two
matrix that can help us think about the kinds of reputation an executive can
develop (see Figure 2). As noted, the combination of strong moral person and
strong moral manager produces a reputation for ethical leadership. However,
what happens if the leader falters in one of these areas? The matrix suggests the
following possibilities: one may develop a reputation as an unethical leader, a
hypocritical leader, or an ethically neutral leader.

The Unethical Leader

A leader who is perceived to be weak on both dimensions will develop
a reputation for unethical leadership. A number of executives we spoke with
named Al Dunlap as a prime example of someone with a reputation for unethi-
cal executive leadership. Business Week recently published excerpts from John
Byrne’s book about Dunlap entitled Mean Business.2 The article describes Dunlap
as the “no-nonsense executive famous for turning around struggling compa-
nies—and sending their shares soaring in the process.” However, Dunlap was
also known for tirades against employees “which could reach the point of emo-
tional abuse.” “He was condescending, belligerent and disrespectful.” “At his
worst, he became viciously profane, even violent. Executives said he would
throw papers or furniture, bang his hands on his desk, and shout so ferociously
that a manager’s hair would be blown back by the stream of air that rushed from
Dunlap’s mouth.” He used the promise of huge rewards to get “employees to do
things they might not otherwise do.” In order to make the numbers that Dunlap
demanded, creative accounting techniques were employed and “dubious tech-
niques were used to boost sales.” He also lied to Wall Street analysts. “Despite
the chaos inside the company, Sunbeam’s chief kept up a steady drumbeat of
optimistic sales and earnings forecasts, promises of tantalizing new products,
and assurances that the Dunlap magic was working.” In the end, the lies could

CALIFORNIA MANAGEMENT REVIEW VOL. 42, NO. 4 SUMMER 2000 137

 Moral Person and Moral Manager: How Executives Develop a Reputation for Ethical Leadership

no longer cover up what was really going on. Wall Street abandoned the com-
pany and the board of directors fired Dunlap. Sunbeam was left crippled and the
company continues to struggle today.
On the moral person dimension, Dunlap was found to be dishonest, he
treated people horribly and made decisions based upon the financial bottom line
only, disregarding the interests of multiple stakeholders in the process. On the
moral manager dimension, his own behavior, communications, and the reward
system were used to send a single consistent message. The bottom line was the
only thing that mattered.

The Hypocritical Leader

A leader who is not perceived to be a strong ethical person but who
attempts to put ethics and values at the forefront of the leadership agenda is
likely to be perceived as a hypocritical leader who “talks the ethics talk” but
does not “walk the ethics walk.” In such cases, people tend to see the talk only
as window dressing. They watch for actions to match the words and if there
is a mismatch, the words are dismissed. As suggested above, some executives
expressed concern about the leader who talks about ethics too much. In terms
of the leader’s reputation for ethical leadership, communicating about ethics and
values, without the actions to match, is probably worse than doing nothing at all
because talk without action places a spotlight on the issue that would not other-
wise be there. As a result, employees become cynical and distrust everything the
leader says. They also figure that they too can ignore ethical standards if they
perceive that the leader does so.

The Ethically Neutral Leader

This category generated a lot of comment. Half of the executives rejected
it out of hand. The other half recognized its existence and almost all of the
twenty corporate ethics officers we talked with readily acknowledged it. On
the moral person dimension, it is most appropriate to say that this person is per-
ceived to be not clearly unethical, but also not strongly ethical. Consider what peo-
ple say about ethically neutral leaders. In terms of traits, the ethically neutral
leader is seen as more self-centered than other-centered. In terms of behaviors,
ethically neutral leaders are less open to input from others and they care less
about people. They are less compassionate. In terms of decision making, ethi-
cally neutral executive leaders are thought to have a narrower view than do
ethical leaders. They focus on financial ends more than the means that are of
interest to ethical leaders. They also are more likely to base decisions upon the
short-term bottom line and they are less concerned with leaving the organiza-
tion or the world a better place for the future. Interestingly, much of the empha-
sis seems to be on what the ethically neutral leader is not (not open to input, not
caring, not focused on means, not concerned with leaving a legacy). This is
important because it means that to perceive ethical leadership, followers need
evidence of positive ethical traits, behaviors, and decision processes. Lack of

138 CALIFORNIA MANAGEMENT REVIEW VOL. 42, NO. 4 SUMMER 2000

 Moral Person and Moral Manager: How Executives Develop a Reputation for Ethical Leadership

awareness of these positive characteristics leads to the perception that the leader
is ethically neutral. Clearly, employees must be aware of these positive attributes
in order for them to infer the existence of ethical leadership.
When asked to talk about ethically neutral leaders, people said virtually
nothing about moral managing (role modeling, communicating, the reward
system). Given that employees make sense of the messages they do get, the ethi-
cally neutral leader’s focus on the short-term bottom line gets employees’ atten-
tion by default. If that is what the leader is focusing on, it must be the only thing
that is important. One executive said, “Ethics hasn’t been on the scorecard for
what’s important here . . . It’s kind of like quality. Quality is something that we
slipped away from and someone had to say, ‘It’s important.’ Maybe the same is
true of ethics . . . we need a Deming . . . to remind us of how important it is.”
Perhaps the most important outcome of ethically neutral leadership is
that employees then think that ethics is not particularly important to the leader,
“So they’re left deciding on their own what’s important in a particular situa-
tion.” This means that they are acting without clear guidance about the ethics
and values of the organization. The leader has not demonstrated it, has not
thought through it, has not given an example of it, has not talked about it, and
has not discussed it in an open forum.

Cultivating a Reputation for Ethical Leadership

Given the importance of ethical leadership, we offer the following practi-
cal steps executives can take to cultivate a reputation for ethical leadership.

Share Your Values: Who You Are as an Ethical Person

“Ethical leadership is not easy . . . the temptations and the rewards for
unethical behavior are great. So, ethical leadership requires a discipline, a men-
tal and personal discipline that is not easy to come by.” Some senior executives
arrive in their leadership positions with all of the necessary cognitive and emo-
tional tools to be an active ethical leader. Part of the reason many of them
ascend to senior leadership positions is because they have a reputation for
integrity, for treating people well and for doing the right thing. They have likely
had a lifetime of personal and work-related mentors and experiences that have
molded and reinforced their values. By the time they reach the executive level,
these values are so solid, that when challenged, the leader holds to them with-
out question.
On the other hand, senior executive positions have a way of challenging
your values in ways you may not have been challenged before. If you think that
this aspect of your leadership needs work, devote energy to developing this side
of yourself. Read books. Attend workshops and seminars with other senior exec-
utives who share your concerns. Work with a personal coach. Talk with your
spiritual advisor about how your values can be applied in your work.

CALIFORNIA MANAGEMENT REVIEW VOL. 42, NO. 4 SUMMER 2000 139

 Moral Person and Moral Manager: How Executives Develop a Reputation for Ethical Leadership

It then becomes particularly important to share this side of yourself. Find

out what employees know about you and how they think of you in ethical lead-
ership terms. You may be a strong ethical person, but your employees may have
no way of knowing that. Most people do not have an accurate view of how oth-
ers see them, especially when it comes to ethics. Surveys consistently find that
most people think of themselves as above average and more ethical than their
peers. However, the only way to honestly assess where you stand in terms of
others’ perceptions is to ask for candid input. A leader should “always have
someone who can tell the emperor that he has no clothes.” So, ask those closest
to you. You can also survey your employees to find out how much they know
about you as an ethical leader. Be open to what you learn and do not be sur-
prised if employees say they simply do not know. For example, if you have not
been outspoken on ethics and values issues, or you have not managed a highly
public crisis that provided an opportunity for employees to learn about your
values, you may be surprised to learn that employees do not know much about
this aspect of your leadership. They may even see you as “neutral” on the ethics
dimension. Talk to your communications people and your ethics officer, if you
have one, about how you might successfully convey your values to employees
on a regular basis. Figure out a way to open the lines of two-way communica-
tion on ethics and values issues. Ask employees to share the ethical dilemmas
they face and to let you know what kind of guidance they would like from you.

Assume the Role of Moral Manager:

Chief Ethics Officer of Your Organization
“Ethical leadership means that the person, the leader, who is exercising
that leadership is well-grounded in a set of values and beliefs that we would
view as being ethical. However, in a leadership sense . . . it means that the leader
sets an example because ethical leadership doesn’t just mean that leader, it
means the entire organization. If there isn’t an observed ethical leadership at the
top, you won’t find it in the organization.”
As noted, moral management requires overt action on the part of the
executive to serve as a role model for ethical behavior in highly visible ways,
to communicate about ethics and values, and to use the reward system to hold
people accountable. James Burke, former CEO of Johnson & Johnson provides
an excellent example of highly visible action that gets everyone’s attention. Soon
after Burke assumed the presidency of Johnson & Johnson, he brought together
28 senior managers to challenge the age-old corporate credo. He asked them to
talk about whether they could really live by the document that had been hang-
ing on corporate walls for years. “If we can’t live by this document then it’s an
act of pretension and we ought to tear it off the walls, get rid of it. If we can live
with it but want to change it that’s okay too, if we can agree on what the
changes should be. And, we could also leave it the way it is.” According to
Burke, people “stayed up all night screaming at each other.” When they were
done, they had updated the credo. They then took it to J&J sites around the

140 CALIFORNIA MANAGEMENT REVIEW VOL. 42, NO. 4 SUMMER 2000

 Moral Person and Moral Manager: How Executives Develop a Reputation for Ethical Leadership

world, released a revised credo in 1979, and committed the organization to it.
Less than three years later, the Tylenol poisoning occurred and lots of folks were
waiting to see whether management would live up to the credo values. As every
student of business ethics and corporate crisis management knows, they did, and
the case is now held up as a premier example of good business ethics. Burke
does not take credit for J&J’s success in handling the corporate crisis. He attrib-
utes the success to the value system that had been articulated. However, clearly
he was responsible for guiding the organization through the values articulation
process and for making the credo prominent in the corporate culture and con-
sciousness. As another executive put it, “all the written statements in the world
won’t achieve ethics in an organization unless the leader is perceived as being
very serious and committed.”
Following the Tylenol crisis, in 1985 Burke launched the credo survey
process. All employees were surveyed regarding the company’s performance
with respect to the credo. Based upon the results, managers held feedback and
problem-solving sessions with their employees and developed action plans to
address problems. The survey process continues today on a biannual schedule
under Burke’s successor, Ralph Larsen, and remains a valuable way to keep
attention focused on the credo and the values it represents.
To better integrate the Credo into the reward system, Larsen instigated a
“standards of leadership” program which holds leaders at all levels accountable
to the credo values. “At the important succession planning meetings, when
upward mobility in the company is discussed, ‘Credo Values’ is first on the
agenda. ‘Business Results’ is next in line. The following behaviors associated
with Credo values are noted: ‘Behaving with honesty and integrity. Treating
others with dignity and respect. Applying Credo values. Using Credo survey
results to improve business. Balancing the interests of all constituents. Managing
for the long term.’”3
Finally, violations of Credo policy are handled swiftly and clearly. In one
incident that involved infiltration of a competitor’s sales meeting, President
Larsen wrote the following to his management, “Our behavior should deeply
embarrass everyone associated with Johnson & Johnson. Our investigation
revealed that certain employees had engaged in improper activities that violated
our policies. These actions were wrong and we took steps, immediately, to disci-
pline those involved and guard against a recurrence of this kind of activity.”4

Conclusion
Being an ethical leader requires developing a reputation for ethical lead-
ership. Developing a reputation for ethical leadership depends upon how others
perceive the leader on two dimensions: as a moral person and as a moral man-
ager. Being a moral person encompasses who you are, what you do, and what
you decide as well as making sure that others know about this dimension of
you as a person. Being a moral manager involves being a role model for ethical

CALIFORNIA MANAGEMENT REVIEW VOL. 42, NO. 4 SUMMER 2000 141

 Moral Person and Moral Manager: How Executives Develop a Reputation for Ethical Leadership

conduct, communicating regularly about ethics and values, and using the reward
system to hold everyone accountable to the values and standards. Ethical leader-
ship pays dividends in employee pride, commitment, and loyalty—all particularly
important in a full employment economy in which good companies strive to find
and keep the best people.

Notes
1. C. Barnard, Functions of the Executive (Cambridge, MA: Harvard University Press,
1938 and 1968), p. 279.
2. J.A. Byrne, “Chainsaw,” Business Week, October 18, 1999, pp. 128-149.
3. L. Foster, Robert Wood Johnson (State College, PA: Lillian Press, 1999), pp. 645-646.
4. Ibid., p. 646.

California Management Review

University of California ▪ F501 Haas School of Business #1900 ▪ Berkeley, CA 94720-1900
(510) 642-7159 ▪ fax: (510) 642-1318 ▪ e-mail: cmr@haas.berkeley.edu ▪ web site: www.haas.berkeley.edu/cmr/